AI Drafter 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
Master Circular on Risk Management and Inter-Bank Dealings
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontracts ....... 2. Contracts other than Forward Contracts 5 5 10 3. General Guidelines for Over the Counter Foreign Exchange Derivative Contracts 4. Currency Futures... 12 13 5. Commodity Hedging.. A. Hedging of Commodity Price Risk in the International Commodity Exchanges/Markets. B. Hedging of price risk on petroleum & petroleum Products 15 15 17 C. Commodity Hedging by entities in Special Economic Zones. 6. Freight hedging ...... 18 18 Section II Facilities for Persons Resident outside India 1. Facilities for Foreign Institutional Investors (Fils).. 2. Facilities for Non-resident Indians (NRIs). 3. Facilities for Hedging Foreign Direct Investment in India………………….. SECTION III 1. Management of Banks' Assets-Liabilities 2. Hedging of Gold Prices 220 .20 23 23 23 24 22 2222 .24 24 .26 26 2222222222 26 26 26 27 27 27 27 27 3. Hedging of Capital... 4. Participation in the currency futures market in India ...……………………. PART B ACCOUNTS OF NON-RESIDENT BANKS. 1. General... 2. Rupee Accounts of Non-Resident Banks. 3. Funding of Accounts of Non-res....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and Para 1(iv) respectively, of this circular; b) the maturity of the hedge does not exceed the maturity of the underlying transaction; c) the currency of hedge and tenor are left to the choice of the customer; d) where the exact amount of the underlying transaction is not ascertainable, the contract is booked on the basis of a reasonable estimate; e) foreign currency loans/bonds will be eligible for hedge only after final approval is accorded by the Reserve Bank, where such approval is necessary or Loan Registration Number (LRN) is given by the Reserve Bank; f) Global Depository Receipts (GDRs) and American Depository Receipts (ADRs) will be eligible for hedge only after the issue price has been finalized; g) balances in the Exchange Earner's Foreign Currency (EEFC) accounts sold forward Website:www.fema.rbi.org.in 5 Email: [email protected] 5 of 64 by the account holders shall remain earmarked for delivery and such contracts shall not be cancelled. They may, however, be rolled-over; h) all forward contracts with Rupee as one of the currencies, booked to cover foreign exchange exposures, falling due within one year, can be freely cancelled and rebooked. All f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efore the maturity of the forward contract. e) Outstanding forward contracts higher than 50 per cent of the eligible limit may be permitted by the AD Category I banks only on being satisfied about the genuine requirements of their constituents after examination of the following documents: • A certificate from the Chartered Accountant of the customer stating that all guidelines have been adhered to while utilizing this facility. ◠A certificate of import/export turnover of the customer during the past three years duly certified by their Chartered Accountant/bank in the format given in Annex-VI. f) In the case of an exporter, the amount of overdue bills should not be in excess of 10 per cent of the turnover, to avail the above facility. g) AD Category I banks are required to submit a monthly report (as on the last Friday of every month) on the limits granted and utilized by their constituents under this facility in the format given in Annex-IX. The report may be forwarded to The Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Amar Building, 5th Floor, Central Office, Mumbai-400 001. NOTE: Limits specifie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uld normally be on a deliverable basis. However, in case of mismatches in cash flows or other exigencies, the contracts booked under this facility may be allowed to be cancelled and re-booked. b) The notional value of the outstanding contracts should not exceed USD 100,000 at any time. c) The contracts may be permitted to be booked up to tenors of one year only. d) Such contracts may be booked through AD Category I banks with whom the resident individual has banking relationship, on the basis of an application-cum-declaration in the format given in Annex XV. The AD Category I banks should satisfy themselves that the resident individuals understand the nature of risk inherent in booking of forward contracts and should carry out due diligence regarding "user Website:www.fema.rbi.org.in 8 Email: [email protected] 8 of 64 appropriateness†and “suitability†of the forward contracts to such customer. (v) A forward contract cancelled with one AD Category I banks can be rebooked with another AD Category I banks subject to the following conditions: a) The switch is warranted by competitive rates on offer, termination of banking relationship with the AD....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... exchange in India or with an Off-shore Banking Unit in a SEZ in India for hedging his loan exposure and unwinding from such hedges, provided that: a) the contract does not involve the Rupee. b) final approval has been accorded or loan identification/registration number issued by the Reserve Bank for borrowing in foreign currency. c) the notional principal amount of the hedge does not exceed the outstanding amount of the foreign currency loan. d) the maturity of the hedge does not exceed the unexpired maturity of the underlying loan. These contracts may be freely cancelled and rebooked. Website:www.fema.rbi.org.in 10 10 Email: [email protected] 10 of 64 (ii) A person resident in India, who has a foreign exchange or Rupee liability, may enter into a contract for Foreign Currency-Rupee Swap with an AD Category I bank in India to hedge long term exposure under the following terms and conditions: a) No swap transactions involving upfront payment of Rupees or its equivalent in any form shall be undertaken. b) Swap transactions may be undertaken by AD Category I banks as intermediaries by matching the requirements of corporate counter parties. c) While no limits ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Foreign Exchange Department, Forex Markets Division, Central Office, Amar Building 5th Floor, Mumbai, 400 001, before undertaking the business. Explanation: The contingent foreign exchange exposure arising out of submission of a tender bid in foreign exchange is also eligible for hedging under this sub-paragraph. NOTE: In respect of foreign exchange derivative contracts both involving the Rupee and not involving the Rupee the following shall be strictly observed. A. In the case of swap structures where premium is inbuilt into the cost and option contracts involving cost reduction structures, AD Category I banks should ensure that - • such structures do not result in increase in risk in any manner and • do not result in net receipt of premium by the customer. B. AD Category I banks should not offer leveraged swap structures. C. AD Category I banks should not allow the swap route to become a surrogate for forward contracts for those users who do not qualify for forward cover. 3. General Guidelines for Over the Counter Foreign Exchange Derivative Contracts • vide The provisions of comprehensive guidelines on Derivatives DBOD.No.BP.BC. 86/21.0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ract shall be USD 1000 for USD-INR contracts, Euro 1000 for Euro-INR contracts, GBP 1000 for GBP-INR contracts and JPY 100,000 for JPY-INR contracts. c. The contracts shall be quoted and settled in Indian Rupees. d. The maturity of the contracts shall not exceed 12 months. e. The settlement price for USD-INR and Euro-INR contracts shall be the Reserve Bank's Reference Rates and for GBP-INR and JPY-INR contracts shall be the exchange rates published by the Reserve Bank in its press release on the last trading day. Membership (i) The membership of the currency futures market of a recognised stock exchange shall be separate from the membership of the equity derivative segment or the cash segment. Membership for both trading and clearing, in the currency futures market shall be subject to the guidelines issued by the SEBI. (ii) Banks authorized by the Reserve Bank under section 10 of the Foreign Exchange Management Act, 1999 as 'AD Category - I bank' are permitted to become trading and clearing members of the currency futures market of the recognized stock exchanges, on their own account and on behalf of their clients, subject to fulfilling the minimum prudential requ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....national commodity exchanges/markets. AD Category I banks, satisfying certain minimum norms, authorized by the Reserve Bank, may also grant permission to listed companies or as otherwise specified by Reserve Bank from time to time to hedge the price risk in respect of any commodity (except gold, platinum & silver), in the international commodity exchanges/ markets. Detailed guidelines and reporting requirements are given in Annex X. Applications for commodity hedging of companies/ firms which are not covered by the delegated authority of AD Category I banks may be forwarded to Foreign Exchange Department, Forex Markets Division, Central Office, Reserve Bank of India, Amar Building, 5th Floor, Website:www.fema.rbi.org.in 15 Email: [email protected] 15 of 64 Mumbai- 400 001, for consideration through the International Banking Division of an AD Category I banks along with specific recommendation giving the following details: 1. A brief description of the hedging strategy proposed, namely: a) description of business activity and nature of risk, b) instruments proposed to be used for hedging, c) names of commodity exchanges and brokers through whom risk is proposed t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o hedge their commodity price risk on anticipated imports of crude oil in overseas exchanges / markets, on the basis of their past performance up to 50 per cent of the volume of actual imports during the previous year or 50 per cent of the average volume of imports during the previous three financial years, whichever is higher. Contracts booked under this facility will have to be regularized by production of supporting import orders during the currency of hedge. An undertaking may be obtained from the companies to this effect. Note: The detailed guidelines/conditions subject to which hedging will be undertaken under this paragraph are given under Annex XII. Website:www.fema.rbi.org.in 17 17 Email: [email protected] 17 of 64 C. Commodity Hedging by entities in Special Economic Zones AD Category I banks may allow entities in the Special Economic Zones (SEZ) to undertake hedging transactions in the overseas commodity exchanges/markets to hedge their commodity prices on export/import, subject to the condition that such contract is entered into on a stand-alone basis. Note: The term "stand alone" means the unit in SEZ is completely isolated from financial contacts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AD Category - I banks may permit domestic oil refining companies to hedge their freight risk on anticipated imports of crude oil on the basis of their past performance up to 50 per cent of the volume of actual imports of crude oil during the previous year or 50 per cent of the average volume of imports during the previous three financial years, whichever is higher. (ii) Contracts booked under the past performance facility will have to be regularized by production of underlying documents during the currency of the hedge. An undertaking may be obtained from the company to this effect. (b) In the case of shipping companies :- (i) The hedging will be on the basis of owned / controlled ships of the shipping company which have no committed employment. The quantum of hedge will be determined by the number and capacity of these ships. The same may be certified by a Chartered Accountant to the AD Category - I bank. (ii) Contracts booked will have to be regularized by production of underlying documents i.e. employment of the ship during the currency of the hedge. An undertaking may be obtained from the company to this effect. (iii) AD Category - I banks may also ensure that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng exposure. 2. Facilities for Non-resident Indians (NRIs) AD banks may enter into forward contracts with NRIs as per the following guidelines to hedge: i) ii) iii) the amount of dividend due to him on shares held in an Indian company; the balances held in the Foreign Currency Non-Resident (Banks) [FCNR(B)] account or the Non-Resident External Rupee [NRE] account. Forward contract with the Rupee as one of the legs may be booked against balances in both the accounts. With regard to balances in FCNR(B) accounts, cross currency (not involving the Rupee) forward contracts may also be booked to convert the balances in one foreign currency to another foreign currency in which FCNR(B) deposits are permitted to be maintained; the amount of investment made under the portfolio scheme in accordance with the provisions of the Foreign Exchange Regulation Act, 1973 or under notifications issued thereunder or is made in accordance with the provisions of the Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 as amended from time to time and in both cases subject to the terms and conditions specified in the proviso to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inking of the value of the portfolio, it may be allowed to continue till the original maturity and should be marked to market at regular intervals. (iv) The net cash flows arising out of these transactions are booked as income and expenditure and reckoned as exchange position wherever applicable. 2. Hedging of Gold Prices AD Category I banks, authorised by Reserve Bank to operate the Gold Deposit Scheme, may use exchange-traded and over-the-counter hedging products available overseas to manage the price risk. However, while using products involving options, it may be ensured that there is no net receipt of premium, either direct or implied. Banks, which are authorised to import gold, are permitted to enter into forward contracts in India with their constituents (exporters of gold products, jewellery manufacturers, trading houses, etc.) in respect of the underlying sale/purchase and loan transactions in gold with them, subject to the conditions specified by the Reserve Bank. The tenor of such contracts should not exceed six months. Website:www.fema.rbi.org.in 23 Email: [email protected] 23 of 64 3. Hedging of Capital a) Foreign banks may hedge the entire Tier I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....P and AG limits. Website:www.fema.rbi.org.in 25 25 Email: [email protected] 25 of 64 PART B ACCOUNTS OF NON-RESIDENT BANKS 1. General (i) Credit to the account of a non-resident bank is a permitted method of payment to non-residents and is, therefore, subject to the regulations applicable to transfers in foreign currency. (ii) Debit to the account of a non-resident bank is in effect an inward remittance in foreign currency. 2. Rupee Accounts of Non-Resident Banks AD Category I banks may open/close Rupee accounts (non-interest bearing) in the names of their overseas branches or correspondents without prior reference to the Reserve Bank. Opening of Rupee accounts in the names of branches of Pakistani banks operating outside Pakistan requires specific approval of the Reserve Bank. 3. Funding of Accounts of Non-resident Banks (i) AD Category I banks may freely purchase foreign currency from their overseas correspondents/branches at on-going market rates to lay down funds in their accounts for meeting their bonafide needs in India. (ii) Transactions in the accounts should be closely monitored to ensure that overseas banks do not take a speculative view on the R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt, Forex Markets Division, Central Office, Amar Building, 5th Floor, Mumbai, 400001. 9. Rupee Accounts of Exchange Houses Opening of Rupee accounts in the names of Exchange Houses for facilitating private remittances into India requires approval of the Reserve Bank. Remittances through Exchange Houses for financing trade transactions are permitted upto Rs.2,00,000 per transaction. Website:www.fema.rbi.org.in 28 28 Email: [email protected] 28 of 64 PART C INTER-BANK FOREIGN EXCHANGE DEALINGS 1. General The Board of Directors of AD Category I banks should frame an appropriate policy and fix suitable limits for various Treasury functions. 2. Position and Gaps The net overnight open exchange position (Annex-l) and the aggregate gap limits are required to be approved by the Reserve Bank. 3. Inter-bank Transactions Subject to compliance with the provisions of paragraphs 1 and 2, AD Category I banks may freely undertake foreign exchange transactions as under: a) With AD Category I banks in India: (i) Buying/Selling/Swapping foreign currency against Rupees or another foreign currency. (ii) Placing/Accepting deposits and Borrowing/Lending in foreign currency. b)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dential/interest-rate norms, credit discipline and credit monitoring guidelines in force. b) extending credit facilities to Indian wholly owned subsidiaries/joint ventures abroad in which at least 51 per cent equity is held by a resident company, subject to the guidelines issued by Reserve Bank (Department of Banking Operations & Development). (v) AD Category I banks may write-off/transfer to unclaimed balances account, Website:www.fema.rbi.org.in 30 Email: [email protected] 30 of 64 unreconciled debit/credit entries as per instructions issued by Department of Banking Operations and Development, from time to time. 5. Loans/Overdrafts a) All categories of overseas foreign currency borrowings of AD Category I banks, (except for borrowings at (c) below), including existing External Commercial Borrowings and loans/overdrafts from their Head Office, overseas branches and correspondents and overdrafts in nostro accounts (not adjusted within five days), shall not exceed 50 per cent of their unimpaired Tier I capital or USD 10 million (or its equivalent), whichever is higher. The aforesaid limit applies to the aggregate amount availed of by all the offices and branches ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....E BANK i) The Head/Principal Office of each AD Category-l banks should submit daily statements of Foreign Exchange Turnover in Form FTD and Gaps, Position and Cash Balances in Form GPB through the Online Returns Filing System (ORFS) as per format given in Annex-II. ii) The Head/Principal Office of each authorised dealer category-I should forward a statement of Nostro / Vostro Account balances on a monthly basis in the format given in Annex-III to the Director, Division of International Finance, Department of Economic Analysis and Policy, Reserve Bank of India, Central Office Building, 8th Floor, Fort, Mumbai-400 001. The data may also be transmitted by fax or e-mail at the numbers/addresses given in the format. iii) AD Category-l banks should consolidate the data on cross currency derivative transactions undertaken by residents in terms of Paragraph 2 (i) and 2 (iv) of Part A Section I and submit half-yearly reports (June and December) to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Central Office, Amar Building, 5th Floor, Mumbai-400 001 as per the format indicated in the Annex-IV. iv) AD Category-l banks s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on-resident banks as at the end of December every year giving their code numbers allotted by Reserve Bank. The list should be submitted before 15th January of the following year to the Central Office of the Reserve Bank, Foreign Exchange Department, Trade Division, Amar Building 5th Floor, Mumbai 400 001. The offices/branches should be classified according to area of jurisdiction of Reserve Bank Offices within which they are situated. - ✗) AD Category · I banks are required to submit a quarterly report on the forward contracts booked & cancelled by SMEs and Resident Individuals, to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Central Office, Forex Markets Division, Amar Building, 5th Floor, Mumbai - 400 001 within the first week of the following month, as per format given in Annex XIV. Website:www.fema.rbi.org.in =4 34 Email: [email protected] 34 of 64 Annex I [See Part C, Paragraph 2] Guidelines for Foreign Exchange Exposure Limits of Authorised Dealers Category-l 1. Coverage For banks incorporated in India, the exposure limits fixed by the Board should be the aggregate for all branches including their overseas br....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Present Value (PV) adjustment. (iv) Arrive at the sum of all the net short positions. (v) Arrive at the sum of all the net long positions. Overall net foreign exchange position is the higher of (iv) or (v). The overall net foreign exchange position arrived at as above must be kept within the limit approved by Reserve Bank. Note Authorised Dealer banks should report all derivative transactions including forward exchange contracts on the basis of PV adjustment for the purpose of Website:www.fema.rbi.org.in 36 Email: [email protected] 36 of 64 calculation of the net open position. The following yield curves may be used to arrive at the discount factors: i) In respect of Forward Exchange Contracts with tenor upto 12 months: Applicable LIBOR rate. ii) In respect of Forward Exchange Contracts with tenor beyond 12 months and upto 13 months: LIBOR rates for 11 months & 12 months may be considered; the difference between these 2 months can be added to the LIBOR rate for 12 months to arrive at the 13 months LIBOR rate. iii) In respect of Forward Exchange Contracts with tenor beyond 13 months and all other derivative contracts: The discount factors for arriving a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n banks authorised to deal in foreign exchange should be included under merchant transactions. GPB 1. Foreign Currency Balances - Cash balances and investments in all foreign currencies should be converted into US dollars and reported under this head. 2. Net open exchange position- This should indicate the overall overnight net open exchange position of the authorised dealer category-l in Rs. Crore. The net overnight open position should be calculated on the basis of the instructions given in Annex I. 3. Of the above FCY/INR- The amount to be reported is the position against the Rupee- i.e. the net overnight open exchange position less cross currency position, if any. Formats of FTD and GPB Statements FTD Statement showing daily turnover of foreign exchange dated....... FCY/INR Purchase from Sales to FCY/FCY Purchase from Sales to GPB Merchant Inter bank Spot, Cash, Forwards Cancellation of Spot Swap Forwards Ready, T.T. etc. Forwards Website:www.fema.rbi.org.in 39 39 Email: [email protected] 39 of 64 Statement showing gaps, position and cash balances as on...... Foreign Currency Balances (Cash Balance + All Investments) Net Open Exchange Positi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Bank /PCFC 1 2 43 of 64 * All Export bills sent on collection. Export bills purchased / discounted / negotiated not to be included. ** To include LCs established / Bills under LCs to be retired / Import collection bills outstanding. Note : Authorised dealers Category-I should consolidate the above data for the bank as a whole and forward a report in EXCEL format giving corporate-wise balances to the Chief General Manager, Foreign Exchange Department, Reserve Bank of India, Central Office, Forex Markets Division, Mumbai- 400 001. Website:www.fema.rbi.org.in Email: [email protected] 44 of 64 Annex VI [See Part A, Section I, paragraph (ii) (e)] Statement giving details of import / export turnover, overdues, etc. Name of the constituent: (Amount in USD million) Financial Year Turnover (April-March) Export Import 2006-07 2007-08 of Existing limit for booking of forward cover based on past performance Percentage overdue bills to turnover Export Import Export Import 2008-09 ▬▬▬▬▬▬▬ 45 of 64 Annex VII [See Part A, Section I, paragraph 2 (iii)] Foreign currency- Rupee Options 1. AD Category-l banks are permi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rived exposures (except exposures arising out of submission of tender bids in foreign exchange). 2. Users a) Customers who have genuine foreign currency exposures in accordance with Schedules I and II of Notification No. FEMA 25/2000-RB dated May 3, 2000 as amended from time to time are eligible to enter into option contracts. b) AD Category-l banks can use the product for the purpose of hedging trading books and balance sheet exposures. 3. Risk Management and Regulatory Issues Website:www.fema.rbi.org.in 47 Email: [email protected] 47 of 64 a) AD Category-l banks wishing to run an option book and act as market makers may apply to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Amar building 5th Floor, Central Office, Fort, Mumbai-400001 with a copy of the approval of the Competent Authority (Board/Risk Committee/ALCO) and a copy of the detailed memorandum put up in this regard. AD Category-l banks who wish to use the product on a back-to-back basis may keep the above Division informed in this regard. b) Market makers would be allowed to hedge the 'Delta' of their option portfolio by accessing the spot ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mail: [email protected] 49 of 64 *Mention balance sheet, trading or client related. II. Option Positions Report Net Portfolio Net Portfolio Net Portfolio Delta Gamma Vega Currency Pair Notional Outstanding calls puts USD-INR USD USD USD EUR-INR EUR EUR EUR JPY-INR JPY JPY JPY (Similarly for other currency pairs) Total Net Open Options Position (INR): The total net open options position can be arrived using the methodology prescribed in A. P. (DIR Series) Circular No. 92 dated April 4, 2003. III. Change in Portfolio Delta Report Change in USD-INR delta for a 0.25% change in spot ($-appreciation) in INR terms = Change in USD-INR delta for a 0.25% change in spot ($-depreciation) in INR terms = Similarly, Change in delta for a 0.25% change in spot (FCY appreciation & depreciation separately) in INR terms for other currency pairs, such as EUR- INR, JPY-INR etc. IV. Strike Concentration Report Maturity Buckets Strike Price 1 week 2 1 2 months 3 3 months weeks month months Website:www.fema.rbi.org.in 50 50 Email: [email protected] 50 of 64 This report should be prepared for a range of 150 paise around current spot level. Cumulative posi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hall be indicated. 2. Amounts in columns 2, 3, 4 and 5 should be cumulative positions over the year. Outstanding amounts at the end of each financial year shall be carried over and taken into account in the next year's limit and therefore shall be included while computing the eligible limits for the next year [PART A, Section I, paragraph 1(ii)(a)] Website:www.fema.rbi.org.in 53 53 Email: [email protected] 53 of 64 Annex X [See Part A, Section I, paragraph 5 A (i)] Hedging of Commodity Price Risk in the International Commodity Exchanges/Markets AD Category I banks, authorized by Reserve Bank, can grant permission to companies listed on a recognized stock exchange to hedge the price risk in respect of any commodity (except gold, platinum and silver) in the international commodity exchanges/ markets. AD Category I banks satisfying the minimum norms as given below and interested in extending this facility to their customers may forward the application for approval, to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Central Office, Forex Markets Division, Amar Building, 5th Floor, Fort, Mumbai - 400 001. Minimum norms which are r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....containment. Only off- set hedge is permitted. 2. All standard exchange traded futures and options (purchases only) are permitted. If the risk profile warrants, the corporate/firm may also use OTC contracts. It is also open to the Corporate/firm to use combinations of option strategies involving a simultaneous purchase and sale of options as long as there is no net inflow of premium direct or implied. Corporates/firms are allowed to cancel an option position with an opposite transaction with the same broker. 3. The corporate/firm should open a Special Account with the AD Category-I bank. All payments/receipts incidental to hedging may be effected by the AD Category-l banks through this account without further reference to the Reserve Bank. Website:www.fema.rbi.org.in 55 55 Email: [email protected] 55 of 64 4. A copy of the Broker's Month-end Report(s), duly confirmed/countersigned by the corporate's Financial Controller should be verified by the AD Category-l bank to ensure that all off-shore positions are/were backed by physical exposures. 5. The periodic statements submitted by Brokers, particularly those furnishing details of transactions booked and con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be conducted and the risks controlled. (ii) Applications from customers to undertake hedge transactions not covered under the delegated authority may continue to be forwarded to Reserve Bank by the AD Category – I banks, for approval as hitherto. - Website:www.fema.rbi.org.in 57 Email: [email protected] 57 of 64 Annex XII [see Part A, Section I, paragraph 5 (B)] Hedging of commodity price risk on petroleum & petroleum Products by domestic crude oil refining companies 1. The hedging has to be undertaken only through AD Category - I banks, who have been specifically authorised by Reserve Bank in terms of A. P. (DIR Series) Circular No. 03 dated July 23, 2005, subject to conditions and guidelines annexed thereto as also given under Annex X. - 2. While extending the above hedging facilities, AD Category – I banks should ensure that the domestic crude oil refining companies hedging their exposures should comply with the following: i. to have Board approved policies which define the overall framework within which derivatives activities are undertaken and the risks contained; ii. sanction of the company's Board has been obtained for the specific act....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... A, Section I, para 1 (iv)(d)] Application cum Declaration for booking of forward contracts up to USD 100,000 by Resident Individuals (To be completed by the applicant) I. Details of the applicant a. Name b. Address.... c. Account No.. d. PAN No. II. Details of the foreign exchange forward contracts required 1. Amount (Specify currency pair) 2. Tenor III. Notional value of forward contracts outstanding as on date ......... IV. Details of actual / anticipated remittances 1. Amount : 2. Remittance Schedule : 3. Purpose: Declaration 1, ..(Name of the applicant), hereby declare that the total amount of foreign exchange forward contracts booked with the (designated branch) of - ---(bank) in India is within the limit of USD 100,000/- (US Dollar One lakh only) and certify that the forward contracts are meant for undertaking permitted current and / or capital account transactions. I also certify that I have not booked foreign exchange forward contracts with any other bank / branch. I have understood the risks inherent in booking of foreign exchange forwardcontracts. Signature of the applicant (Name) Place: Date: Certificate by the Authorised Dealer Category ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the Master Circular on Risk Management and Inter-Bank Dealings Sr. No. Notification / Circular 1. Notification No. FEMA 25/2000-RB 2. 3. 4. 5. 6. 7. 8. 1. 2. Notification No. FEMA 101/2003-RB Notification No. FEMA 104/2003-RB Notification No. FEMA 105/2003-RB Notification No. FEMA 127/2005-RB Notification No. FEMA 143/ 2005-RB Notification No. FEMA 147/2006-RB Notification No. FEMA 148/2006-RB A.P (DIR Series) Circular No. 92 A.P (DIR Series) Circular No. 93 October 21, 2003 January 5, 2005 December 19, 2005 March 16, 2006 March 16, 2006 April 4, 2003 Date May 3, 2000 October 3, 2003 October 21, 2003 April 5, 2003 3. A.P (DIR Series) Circular No. 98 April 29, 2003 4. A.P (DIR Series) Circular No. 108 5. 6. 7. 8. 9. 10. 11. 12. 13. EC.CO.FMD. No.8/02.03.75/2002-03 14. EC.CO.FMD. No. 14/02.03.75/2002-03 15. 16. 17. 18. FE.CO.FMD 21921/02.03.75/2005-06 19 A.P.(DIR Series) Circular No.21 20 21 23 24 2222 A.P.(DIR Series) Circular No. 28 A.P.(DIR Series) Circular No. 46 A.P.(DIR Series) Circular No. 47 A.P.(DIR Series) Circular No. 81 A.P.(DIR Series) Circular No 26 A.P.(DIR Series) Circular No 47 A.P.(DIR Series) Ci....